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Who benefits from minority business set-asides? The case of New Jersey

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  • Samuel L. Myers

    (The Humphrey Institute of Public Affairs, University of Minnesota, 301 19th Avenue South, Minneapolis, MN 55455)

  • Tsze Chan

    (Pelavin Research Institute, Washington, DC)

Abstract

Race-based remedies often are justified by evidence of prior discrimination. They work when they benefit groups previously disadvantaged. This article examines one such remedy-minority business set-asides-and its application in the award of public procurement and construction contracts by the state of New Jersey. Analyzed are contract awards to minority and non-minority|non-women-owned business enterprises in 1990, as well as in periods before, during, and after the imposition of a state minority set-aside program. Using a conventional decomposition approach, the article reveals significant discriminatory gaps in the success of minority- versus non-minority-owned firms in obtaining contracts from the state of New Jersey. The analysis suggests that minority contracting success rates fell from the pre-set-aside era to the set-aside era and that discriminatory outcomes persisted. The particular remedy chosen-while justified based on evidence of prior discrimination-appears not to have reduced the original discrimination nor did it unambiguously benefit minority businesses.

Suggested Citation

  • Samuel L. Myers & Tsze Chan, 1996. "Who benefits from minority business set-asides? The case of New Jersey," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 15(2), pages 202-226.
    • Handle: RePEc:wly:jpamgt:v:15:y:1996:i:2:p:202-226
    DOI: 10.1002/(SICI)1520-6688(199621)15:2<202::AID-PAM3>3.0.CO;2-N
    as

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    References listed on IDEAS

    as
    1. Faith Ando, 1988. "Capital issues and the minority-owned business," The Review of Black Political Economy, Springer;National Economic Association, vol. 16(4), pages 77-109, March.
    2. Knight, Kenneth E & Dorsey, Terry, 1976. "Capital Problems in Minority Business Development: A Critical Analysis," American Economic Review, American Economic Association, vol. 66(2), pages 328-331, May.
    3. Dennis E. Black, 1983. "Effectiveness of the Mandatory Minority Business Set-Aside Contracting Goals," Evaluation Review, , vol. 7(3), pages 321-336, June.
    4. Cotton, Jeremiah, 1988. "On the Decomposition of Wage Differentials," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 236-243, May.
    5. Timothy Bates, 1981. "Effectiveness of the small business administration in financing minority business," The Review of Black Political Economy, Springer;National Economic Association, vol. 11(3), pages 321-336, March.
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    Citations

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    Cited by:

    1. Aaron K. Chatterji & Kenneth Y. Chay & Robert W. Fairlie, 2014. "The Impact of City Contracting Set-Asides on Black Self-Employment and Employment," Journal of Labor Economics, University of Chicago Press, vol. 32(3), pages 507-561.
    2. Gregory N. Price, 2012. "Race, Trust in Government, and Self-Employment," The American Economist, Sage Publications, vol. 57(2), pages 171-187, November.
    3. Grant H. Lewis, 2017. "Effects of federal socioeconomic contracting preferences," Small Business Economics, Springer, vol. 49(4), pages 763-783, December.
    4. Rodrigo Lovaton Davila & Inhyuck “Steve” Ha & Samuel L. Myers, 2012. "Affirmative action retrenchment in public procurement and contracting," Applied Economics Letters, Taylor & Francis Journals, vol. 19(18), pages 1857-1860, December.
    5. Rodrigo Carril & Audrey Guo, 2023. "The Impact of Preference Programs in Public Procurement: Evidence from Veteran Set-Asides," Working Papers 1417, Barcelona School of Economics.
    6. Marion, Justin, 2007. "Are bid preferences benign? The effect of small business subsidies in highway procurement auctions," Journal of Public Economics, Elsevier, vol. 91(7-8), pages 1591-1624, August.
    7. Manuel Carvajal, 2006. "Economic grounds for affirmative action: The evidence on architects and engineers in South Florida," Review of Social Economy, Taylor & Francis Journals, vol. 64(4), pages 515-538.
    8. Timothy Bates & William D. Bradford & Robert Seamans, 2018. "Minority entrepreneurship in twenty-first century America," Small Business Economics, Springer, vol. 50(3), pages 415-427, March.
    9. David Neumark & Harry Holzer, 2000. "Assessing Affirmative Action," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 483-568, September.
    10. Timothy Bates, 2002. "Minority businesses serving government clients amidst prolonged chaos in preferential procurement programs," The Review of Black Political Economy, Springer;National Economic Association, vol. 29(3), pages 51-70, December.
    11. Robert W. Fairlie & Alicia M. Robb, 2008. "Race and Entrepreneurial Success: Black-, Asian-, and White-Owned Businesses in the United States," MIT Press Books, The MIT Press, edition 1, volume 1, number 026206281x, April.
    12. Fatima Hafsa & Nicole Darnall & Stuart Bretschneider, 2021. "Estimating the True Size of Public Procurement to Assess Sustainability Impact," Sustainability, MDPI, vol. 13(3), pages 1-18, January.
    13. Bates, Timothy, 2002. "Restricted access to markets characterizes women-owned businesses," Journal of Business Venturing, Elsevier, vol. 17(4), pages 313-324, July.
    14. Robert Fairlie & Justin Marion, 2012. "Affirmative action programs and business ownership among minorities and women," Small Business Economics, Springer, vol. 39(2), pages 319-339, September.

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